Abstract [en]

This Master thesis was written for Lantmännen Agroetanol in Norrköping concerning the layout of their finished goods inventory and unloading of feed after introducing a new product mix. Lantmännen Agroetanol has two production lines which produces feed. Both lines lead to six silos, used as inventory of finished goods. The feed from the two production lines differ in terms of quality, where as Lantmännen Agroetanol wants to separate their finished inventory in order to charge a higher price, by selling the better product as a premium. With two different feed products the yearly revenue is expected to increase which motivates a research about the current capabilities and necessary changes to be made in the factory. This study aims to address part of this research by focusing on the breakdown of the finished inventory and the capabilities of the unloading function to this new product mix from a logistical perspective.

In the study the inventory of finished goods were analyzed according to three different scenarios. Furthermore the unloading function was investigated with regards to two alternatives. Between the two production lines, Agro12 is the one that produces lowest quality and Agro10 the higher. The premium product is a result from the Agro10 production line, which today counts for a third of the Agro12 production volume. Even though great variation in market demands has been discovered for this product over the years, the demand for the premium product is expected to be higher due to its broad scope of use.

The inventory of finished goods was analyzed using a simulation model programmed in Microsoft Excel. It was created based on information collected from interviews at the company as well as from their production system. Data of inventory levels, in- and outflow on a daily basis were collected over the year of 2012 in order to simulate the inventory capacity of the different inventory scenarios. The unloading function was analyzed by performing manual calculations, also with help from the employees and collected information from the production system. Data regarding in- and outflow and adjustment times were collected in order to calculate employee overtime as a result of the unloading function, which is controlled by employees.

To be able to compare the three inventory scenarios and the two unloading alternatives with each other a total cost model was used along with a service flexibility view as a complement. In the cost model, the Investment costs were calculated for possible rebuilding’s that has to be made. The variable costs related to the inventory were calculated based on handling costs of the excess of feed from the simulations. The corresponding variable costs for the unloading function were calculated based on overtime hours for the employees. Qualitatively, the flexibility for the customer was analyzed with regards to changes in the unloading function.

The results according to this study show that Lantmännen Agroetanol should implement inventory scenario 3 which means that the feed from Agro10 will be stored in two silos and the feed from Agro12 in three silos. The remaining silo will be used as a stand-by ready to store the product that needs extra capacity the most. Scenario 1 means that the production lines gets three silos each, which turned up to be an in appropriate solution according to the simulations because Agro10 only required a third silo in 16 out of 366 days. Scenario 2 is more appropriate because Agro12 has a bigger need for a fourth silo.Scenario 2 and 3 has the same need of rebuilding whereas the stand-by silo can be reached from both production lines. Scenario 3 is recommended because it entails the possibility to regulate the stand-by silo which makes it less sensitive for disturbances compared to scenario 2.

The study also recommends Lantmännen Agroetanol to build a new unloading silo instead of just using the current one so that the two feed products could be unloaded simultaneously. It is a big investment cost to build a new unloading silo but the results from this study show that it is more profitable than just having one in the long turn. With one unloading silo the employees have to work with adjustment times every time two subsequent customers want different feed products. It means that the employees have to adjust the unloading silo to the other product. There is already overtime among the unloading staff which means that one of the most strained functions in the company will be even more pressured with only one silo to unload two products. In addition, the boat transportations with high capacity that appear on a weekly basis affect the flexibility towards the customers. Thus, giving yet another reason for two silos rather than one, when introducing the new product mix.